Colorado Employer's Law Blog

Colorado Employer's Law Blog

An Employer's Guide Through the Twists and Turns of Employment Law and Litigation, Including Collective and Class Actions.

Colorado Supreme Court Provides Clarity On Independent Contractors

Posted in Colorado Employment Security Act, Human Resources, Independent Contractor, Misclassification, Unemployment Insurance
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On Tuesday, May 13, 2014, the Colorado Supreme Court issued two decisions that provide a glimmer of hope for businesses waging the war with state government agencies over the classification of workers as independent contractors.

The cases are:

  1. Industrial Claim Appeals Office v. Softrock Geological Services, Inc. et al. (involving the classification of 1 geologist)
  2. Western Logistics, Inc. d/b/a Diligent Delivery Systems v. Industrial Claim Appeals Office et al. (involving the classification of 220 delivery drivers)

Both cases involve whether an individual is an “independent contractor” under the Colorado Employment Security Act, C.R.S. 8-70-115. Both cases arose as a result of audits conducted by the Colorado Division of Employment and Training (aka Division of Unemployment Insurance). And, both cases originally found the businesses to be liable for unemployment compensation premiums due. In other words, for the most part, the Division (the auditor, the Hearing Officer(s) and/or the Industrial Claim Appeals Office) found that the workers in question should be classified as employees, and therefore, the companies owed back taxes for unemployment insurance premiums, interest, and going forward contributions. The businesses appealed.

The Colorado Supreme Court Decisions

In two en banc decisions (meaning all judges sat for the decisions), the Colorado Supreme Court remanded to the Colorado Court of Appeals and/or returned Softrock and Western Logistics back to the Division for proceedings consistent with the Court’s holding that there is no dispositive single factor or set of factors to determine whether a worker is engaged in an independent trade or business under the Colorado Employment Security Act. Rather, the answer to the question of “independent trade” can only be resolved by applying a “totality of the circumstances” test that evaluates the particular set of circumstances and dynamics of the relationship between the worker and the company engaging the services.

The factors for evaluation include, but are not limited to, the 9 factors set forth in the statute:

[Whether the employer:]

  1. Require[s] the individual to work exclusively for the person for whom services are performed; except that the individual may choose to work exclusively for the said person for a finite period of time specified in the document;
  2. Establish[es] a quality standard for the individual; except that [the employer] can provide plans and specifications regarding the work but cannot oversee the actual work or instruct the individual as to how the work will be performed;
  3. Pay[s] a salary or hourly rate but rather a fixed or contract rate;
  4. Terminate[s] the work during the contract period unless the individual violates the terms of the contract or fails to produce a result that meets the specifications of the contract;
  5. Provide[s] more than minimal training for the individual;
  6. Provide[s] tools or benefits to the individual; except that materials and equipment may be supplied;
  7. Dictate[s] the time of performance; except that a completion schedule and a range of mutually agreeable work hours may be established;
  8. Pay[s] the individual personally but rather makes checks payable to the trade or business name of the individual; and
  9. Combine[s] [the employer’s] business operations in any way with the individual’s business, but instead maintains such operations as separate and distinct.

And, other factors, such as whether the worker:

  1. Maintains an independent business card, listing, address, or telephone;
  2. Has a financial investment such that there was a risk of suffering a loss on the project;
  3. Uses his or her own equipment on the project;
  4. Sets the price for performing the project;
  5. Employs others to complete the project; and
  6. Carries liability insurance.

And still, other factors, including a “wide array of factors” related to the parties’  actual relationship, rather than a “rigid check-box type inspection.”

The Division has relied for many years on a strict, 2-factor analysis to determine the classification or misclassification of a worker: (1) whether the worker is free from “control and direction” in the performance of his/her services; and (2) whether the worker is “customarily engaged in an independent trade, occupation, profession, or business related to the service performed.”  The “control and direction” factor remains intact.  However, the “independent trade” factor used to mean that the Division would find a misclassified employee in any situation where a worker did not perform the same type of services for others as an independent contractor during the period in question. Now (as aptly and reasonably pointed out by the Colorado Supreme Court), such reliance by the Division on a single-factor test for the “independent trade” element “unfairly subjects the employer to a hindsight review of whether the putative employee engaged in other work during the period in question and does not consider the myriad of reasons that an independent contractor might not engage in other employment despite being free to do so.”

What Does This Mean for Businesses Going Forward?

First, some joy and celebration is okay – yippie! Next, it is still important to evaluate worker classifications and ensure that employees are not improperly classified as independent contractors under Colorado law.  Colorado is one of a handful of states that have signed on to partner with the United States Department of Labor to combat, what the government views, as businesses improperly misclassifying employees as independent contractors.  Colorado also has passed its own law that authorizes the Division to conduct audits and investigations of complaints and to fine employers up to $5,000 per misclassified employee for the first misclassification with willful disregard and up to $25,000 per misclassified employee for subsequent misclassifications.

The clarified test under Colorado law, thankfully, is far less rigid than its past application and should be conducted going forward on a case-by-case basis applying a “wide array of [relevant] factors.” Future case law, no doubt, will help refine the factors applicable under various circumstances. For now, businesses in Colorado can breathe a collective sigh of relief that the Colorado Supreme Court has, at least, provided clarity (and a much needed voice of reason) on the proper analysis of independent contractors under the Colorado Employment Security Act.

Colorado Discrimination Claims Soon To Be More Treacherous For Employers

Posted in Disability, Discrimination, Human Resources, Retaliation

Treacherous.jpgFive years in the making (previously introduced without success in 2009, 2010, 2011, and 2012), the Job Protection and Civil Rights Enforcement Act of 2013 (HB 13-1136) (PDF) was introduced again this year in the House on January 18, 2013, and took less than five months to pass through both branches of the Colorado legislature and get signed into law by the Governor on May 6, 2013, despite considerable opposition from business groups.

Effective January 1, 2015, the Job Protection and Civil Rights Enforcement Act of 2013 significantly amends the Colorado Anti-Discrimination Act (CADA) to allow for the recovery of compensatory and punitive damages and prevailing plaintiff attorneys’ fees, among other changes, in employment discrimination cases brought under Colorado state law.

Regardless of size, small employers (defined as less than 15 employees) and large employers (more than 15 employees) should be aware of the changes to CADA and implement proactive steps to help minimize the increased exposure to future CADA claims.

What is CADA and What Are the Amendments?

The Colorado Anti-Discrimination Act (CADA) was enacted in 1957 and prohibits discrimination in the workplace based on race, color, disability, gender, sexual orientation (including transgender status), national origin, ancestry, religion, creed, and age. Where Title VII of the Civil Rights Act of 1964 applies to employers with 15 or more employees, CADA applies to Colorado employers of any size. CADA is also broader than Title VII because it prohibits discrimination based on age, disability and sexual orientation, which are not protected classes under Title VII (although age is protected under the Age Discrimination in Employment Act, and disability, under the Americans With Disabilities Act).

Prior to the enactment of the Job Protection and Civil Rights Enforcement Act of 2013, a successful CADA plaintiff could only be awarded the following equitable relief:

  • Reinstatement;
  • Back Pay;
  • Front Pay; and
  • Interest on Back Pay.

The recently passed CADA amendments will allow successful plaintiffs to recover the above remedies, plus the following enhanced remedies:

  • Compensatory Damages (e.g., future pecuniary loss, emotional distress, suffering, inconvenience, mental anguish, loss of enjoyment of life);
  • Punitive Damages; and
  • Attorneys’ Fees.

To recover compensatory damages, a CADA plaintiff must show that he or she was the victim of intentional discrimination in the workplace. To recover punitive damages, a CADA plaintiff must show with “clear and convincing evidence” that the discriminatory practice was done with “malice or reckless indifference to the rights of the plaintiff.” However, a court will take into consideration the size and assets of a company, as well as the egregiousness of the intentional discrimination. Moreover, similar to Title VII, the CADA amendments will allow prevailing plaintiffs to recover their attorneys’ fees and costs. As for prevailing defendant-employers, they may only recover their attorneys’ fees if the action by the plaintiff is proven to be frivolous, groundless or vexatious – a difficult bar to reach.

Fortunately, the CADA amendments will provide caps on compensatory and punitive damage awards (also similar to Title VII, and incorporating the limits of Title VII for employers with 15 or more employees):

  • For employers who employ 1 to 4 employees, the total of both compensatory and punitive damages cannot exceed $10,000;
  • For employers who employ 5 to 14 employees, the total of compensatory and punitive damages cannot exceed $25,000;
  • For employers who employ 15 to 100 employees, the total of compensatory and punitive damages cannot exceed $50,000;
  • For employers who employ 101 to 200 employees, the total of compensatory and punitive damages cannot exceed $100,000;
  • For employers who employ 201 to 500 employees, the total of compensatory and punitive damages cannot exceed $200,000; and
  • For employers who employ 501 or more employees, the total of compensatory and punitive damages cannot exceed $300,000.

Beyond expanding the remedies for CADA claims, the amendments also eliminate the age limit on age discrimination claims in Colorado.  Previously, CADA only prohibited discrimination based on age if a plaintiff was older than 40, but less than 70 years of age.

What Are the Practical Impacts? 

Risks Ahead.jpgBecause the amendments allow individuals to recover compensatory and punitive damages and attorneys’ fees (for example, against a small business owner in Colorado that employs 1 employee), the number of CADA claims are going to increase. Unfortunately, the cost of defending one CADA lawsuit, even if frivolous, could be enough to put a small business out of business.

In addition, the CADA amendments mean more state court employment litigation, which is more treacherous for employers. Traditionally, federal courts will weed out threadbare claims more readily than state courts and also tend to be more employer-friendly.

Also, when only equitable relief was available, CADA claims by themselves went before judges. Now, CADA claims will go before juries in Colorado, since compensatory and/or punitive damages will likely be sought in most, if not all, future CADA complaints.

Finally, as there is new exposure to punitive damages with respect to CADA claims, businesses (particularly, small businesses) have no guaranteed way to protect against such a loss through insurance. The public policy of Colorado prohibits an insurance carrier from providing insurance coverage for punitive damages. See Universal Indemnity Ins. Co. v. Tenery, 39 P.2d 776, 779 (Colo. 1934); Lira v. Shelter Ins. Co., 913 P.2d 514 (Colo. 1996). As a result, a small business accused of a CADA violation faces a dire situation with defense costs alone, let alone the potential risk of an uninsurable award of punitive damages.

What Should Colorado Employers Do?

As Colorado state law employment claims under CADA will be more lucrative for plaintiffs and plaintiff’s lawyers, and will very likely increase in number, employers of all sizes are wise to:

  1. Implement effective policies prohibiting discrimination, harassment and retaliation in the workplace;
  2. Conduct training for all managers and supervisors (at a minimum) to promote awareness and teach them how to take prompt, appropriate action when potential discrimination, harassment and/or retaliation arises;
  3. Audit employment practices to identify problem areas; and
  4. Evaluate whether it makes financial sense to purchase Employment Practices Liability Insurance (EPLI) to provide protections and cover defense costs should a claim arise.

Effective written policies, EEO and harassment training, and periodic self-audits are evidence of good faith compliance efforts that could successfully eliminate any risk for punitive damages.

Last but not least, the Job Protection and Civil Rights Enforcement Act of 2013 only applies to causes of action that accrue after January 1, 2015 — so, at least there is time to get ready.

Colorado is the Ninth State To Restrict Use of Credit History in Employment Decisions

Posted in Background Checks, Human Resources

Pen Signing.jpgOn April 19, 2013, Governor John Hickenlooper signed into law SB 13-018, otherwise known as “the Employment Opportunity Act.” The Employment Opportunity Act prohibits employers from obtaining and using consumer credit information for employment purposes unless the credit information is “substantially related” to the position. 

Currently, there are only 8 other states where employment protections have been adopted for individuals who may have fallen on hard economic times, including California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont, and Washington.   

Colorado employers must comply with the Employment Opportunity Act on or before its effective date of July 1, 2013. Violators will be subject to Department of Labor investigations and civil penalties up to $2,500 per violation.

For more information on the Colorado Employment Opportunity Act and how to comply, see my prior posts here and here.

Employers: Are You Using the Right I-9, FMLA and FCRA Forms?

Posted in Background Checks, Human Resources

 

iStock_000017765581_ExtraSmall.jpgEmployers take note of a slew of employment law changes in 2013, including new I-9 forms, new FMLA posters and forms, and new FCRA forms.  

New I-9 Forms

Effective May 7, 2013, new Employment Eligibility Verification Form I-9s are required. The new forms are available from the U.S. Citizenship and Immigration Services website at:http://www.uscis.gov/files/form/i-9.pdf. The new I-9 form was published on March 8, 2013 and must be in place and used by employers starting in May 2013.    

New FMLA Poster & Forms

Effective March 8, 2013, employers must post the new Family and Medical Leave Act (FMLA) poster and use updated FMLA notice and certification forms. The Department of Labor’s (DOL) model forms can be found on the DOL website at: http://www.dol.gov/whd/fmla/2013rule/militaryforms.htm.

To learn more about the changes, the DOL Wage and Hour Division posted a side-by-side comparison of the current and final regulations at: http://www.dol.gov/whd/fmla/2013rule/comparison.htm

New FCRA Forms & Enforcement Agency

As of January 1, 2013, for employers who use a third party service to conduct background checks on applicants or employees, 3 notices required under the Fair Credit Reporting Act (FCRA) changed:

  1. Summary of Consumer Rights;
  2. Notice to Users of Consumer Reports of their Obligations; and 
  3. Notice to Furnisher of Information of Their Obligations.  

The new forms are available at: http://www.gpo.gov/fdsys/pkg/FR-2012-11-14/pdf/2012-27581.pdf. In addition, the Consumer Financial Protection Bureau (CFPB) has become the new enforcement agency for the FCRA (previously, the responsible agency was the Federal Trade Commission). Both private individuals and the CFPB can bring claims for negligent violations of the FCRA seeking damages and attorneys’ fees, as well as wilful violations, which expose employers to statutory damages in the amount of $100-$1,000 per violation, attorneys’ fees and punitive damages. 

 

The Aye’s Have It – Colorado’s Civil Union Act Signed Into Law & Employment Opportunity Act Passed in Both Senate and House

Posted in Background Checks, Discrimination, Human Resources

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While many Coloradoans are taking advantage of their last few ski days of the season, the Colorado legislature has been busy passing new, groundbreaking legislation with respect to civil unions and the use of individual credit histories in employment decisions. How will this new legislation affect employers? Read on.

Colorado Civil Union Act

On March 21, 2013, Governor John Hickenlooper signed the Colorado Civil Union Act (SB13-011) (PDF) into law, authorizing 2 unmarried adults, regardless of gender, to enter into a civil union.

Effective May 1, 2013, among other rights, benefits and protections, the Colorado Civil Union Act provides that parties to a civil union in Colorado are granted the following:

  • Dependent coverage under health insurance policies for plans issued, delivered, or renewed on or after January 1, 2014;
  • Dependent coverage under life insurance for plans issued, delivered, or renewed on or after January 1, 2014;
  • Prohibitions against discrimination based upon spousal status;
  • Survivor benefits under and inclusion in workers’ compensation laws;
  • The right of a partner in a civil union to be treated as a family member or as a spouse under the “Colorado Employment Security Act” for purposes of unemployment benefits;
  • Eligibility for family leave benefits;
  • The ability to insure a party to a civil union under group benefit plans for state employees;
  • The ability to designate a party to a civil union as a beneficiary under the state public employees retirement SB13-01 system;
  • Survivor benefits under local government firefighter and police pensions;
  • Protections and coverage under domestic abuse and domestic violence laws; and
  • The ability to file a claim based on wrongful death, emotional distress, loss of consortium, dram shop, or other laws, whether common law or statutory, related to or dependent upon spousal status.

CBS 4 Denver reported on the signing of this historical legislation in Colorado, and also discussed that there are many supporters of same sex marriage who believe that the Civil Union Act was passed too soon in Colorado and will create complications involving 2 separate and unequal classes of citizens (i.e., same sex couples in a “civil union” and those in a “marriage”). The United States Supreme Court is currently hearing arguments on the constitutionality of the 1996 Defense of Marriage Act (DOMA), which is certain to have an impact on Colorado’s new law.

Employment Opportunity Act

On March 25, 2013, the House passed its Third Reading of the Employment Opportunity Act (SB13-018) (PDF), which sets forth the permissible use of credit information with regard to hiring and other employment decisions. I previously posted a summary of the Employment Opportunity Act, which affects all employers in Colorado with 4 or more employees.

Now that the Employment Opportunity Act has passed the Senate and the House, the bill will briefly go back to the Senate (where the bill originated) to approve the amendments by the House. If the Senate accepts the changes, which is anticipated, it goes to the Governor to be vetoed or signed into law. Will the Governor sign the Employment Opportunity Act into law? It is likely not a matter of if but when, and all signs point to the final stamp of approval soon since the Act’s effective date is July 1, 2013.

By the way, if anyone is interested to see how a bill becomes law in Colorado, the Colorado Legislative website has published a fantastic flow chart (PDF) regarding the legislative process.

What Should Employers Do Now?

Small, medium and large sized businesses/employers must be aware of these new rights, benefits and protections that go into effect May 1, 2013 (Civil Union Act) and July 1, 2013 (Employment Opportunity Act). Steps should be taken to modify benefit policies and enrollment forms relating to individuals in civil unions for Colorado plans issued or renewed on or after January 1, 2014. In addition, employers are wise to dust off and review their employment policies to ensure all written policies are fully compliant with these and all other applicable new laws.

Last but not least, do not hesitate to engage competent employment counsel, before a claim arises, so that you are properly informed of and can stay on top of the ever-changing laws, rules and regulations affecting employment in Colorado.

Colorado’s Employment Opportunity Act Resurfaces And Picks Up Steam

Posted in Background Checks, Human Resources, Restrictive Covenants

iStock_000017567956_ExtraSmall.jpgPercolating since last year, Colorado’s Employment Opportunity Act has resurfaced in early 2013 and may be on the road to passage.  Known as SB13-018, or Senate Bill 18, the Employment Opportunity Act recently passed its third reading in the Senate on February 12, 2013 (final vote, 20 in favor: 15 opposed) and now is before the House. Employers take note – if passed, the Employment Opportunity Act WILL affect the use of credit checks in employment decisions in Colorado, from hiring decisions to running background checks on existing employees.

What Is the Employment Opportunity Act?

The Employment Opportunity Act sets forth the lawful purposes for which an employer or a potential employer may use consumer credit information (consumer credit reports and credit scores).  Employers who violate the Employment Opportunity Act may be subject to civil penalties in the amount of $2,500 per violation.  Aggrieved employees or prospective employees will be able to file complaints with the Department of Labor.  The Department of Labor will be authorized to conduct investigations, hold hearings, and award civil penalties against employers.

Among other things, the Employment Opportunity Act:

  • Prohibits an employer’s use of consumer credit information for employment-related decisions unless the employer is a bank or financial institution, the credit report is required by law, or if the information is “substantially related” to the job.
  • “Substantially related” to the job means that the position or prospective position is one of “executive or management personnel or officers or employees who constitute professional staff to executive and management personnel” and the position involves one or more of the following duties:
    1. Setting the direction or control of a business, division, unit, or an agency of a business;
    2. A fiduciary responsibility to the employer;
    3. Access to customers’, employees’ or the employer’s personal or financial information other than information customarily provided in a retail transaction;
    4. The authority to issue payments, collect debts, or enter into contracts; or
    5. Involves contracts with defense, intelligence, national security, or space agencies of the federal government.

Employment attorneys in Colorado know that the definition of “executive or management personnel or officers or employees who constitute professional staff to executive and management personnel“, a phrase taken directly from Colorado’s statute regarding non-competition agreements (C.R.S. 8-2-113), has yet to be clearly defined by Colorado courts in non-compete cases.  If the Employment Opportunity Act is passed as currently drafted, it appears that Department of Labor Hearing Officers (not judges or lawyers) may get to chime on who constitutes this elusive category of employees.

The full text of the Employment Opportunity Act is available here: Senate Bill 18.pdf.

What Employers Must Comply?

The Employment Opportunity Act would apply to “employers” as defined by Colorado Revised Statute, Section 8-1-101, and also “prospective employers,” which is not defined.  Pursuant to C.R.S. 8-1-101, an “employer” means:

  • The state, and each county, city, town, irrigation, and school district therein, and all public institutions and administrative boards thereof having 4 or more employees;
  • Every person, association of persons, firm, and private corporation, including any public service corporation, manager, personal representative, assignee, trustee, and receiver, who has 4 or more persons regularly engaged in the same business or employment, except as otherwise expressly provided in this article, in service under any contract of hired, expressed or implied.
  • Note that an “employer” is not an employer of private domestic servants or farm and ranch labor, nor employers who employ less than 4 employees in the same business, or in or about the same place of employment.  The definition also excludes any state or local law enforcement agency.

Presumably, a “prospective employer” would be an employer considering a new applicant that otherwise fits the definition above.  Hypothetically, however, if you regularly employ 3 employees, just hired a 4th and are considering a 5th, may you be properly excluded?  Without a definition of “prospective employer,” it is not entirely clear.

What’s Next?

If passed, the Colorado Employment Opportunity Act could be effective as early as July 1, 2013 and would apply to any acts related to the use of credit checks after that date.

We will monitor the status of this new legislation affecting employers in Colorado and will post an update with more information as it becomes available. Stay tuned.

New Year, New Minimum Wage Increase

Posted in Background Checks, Colorado Wage Act, Fair Labor Standards Act, Human Resources

iStock_000018764690_ExtraSmall.jpgAs of January 1, 2013, Colorado’s minimum wage increased from $7.64 per hour to $7.78 per hour, with tipped employee’s minimum wage increasing from $4.62 per hour to $4.76 per hour. The Colorado Division of Labor adopted Colorado Minimum Wage Order Number 29 (PDF) to reflect the new state minimum wage.  The Minimum Wage Order also provides important information about meal periods and rest breaks in Colorado.  

Where employees are covered by federal and Colorado state minimum wage laws, the employer must pay the higher minimum wage. Currently, the federal minimum wage is $7.25 per hour, which is lower than Colorado’s minimum wage of $7.78 per hour. Thus, beginning January 1, 2013, employers in Colorado must ensure all employees receive at least $7.78 per hour for all hours worked (or $4.76 per hour for tipped employees).

Colorado Businesses Beware – ADA Public Accommodation “Drive-By” Lawsuits On The Rise

Posted in Disability, Discrimination

iStock_000020079234XSmall.jpgKnown as “Drive-By Litigation,” Colorado is getting hit by a rash of lawsuits alleging that businesses are violating Title III of the Americans With Disabilities Act (ADA). Since April of this year, 20 lawsuits (and counting) have been filed against Denver area businesses by the same Plaintiff who is represented by the same two attorneys from Florida, for alleged violations of Title III of the ADA, including things like lack of ramps, narrow doorways, missing signage, doorknobs that can’t be opened by a closed fist, and misplaced soap dispensers and coat racks.

Most of the businesses are in well-to-do areas of Denver, such as The Highlands, LoDo, LoHi, and SoBo, and include everything from popular restaurants, hair salons, day spas, tobacco shops, muffler shops, delis, and donut shops, to even a motel and a tile and linoleum shop. Channel 7 News recently ran a news story that is worth viewing called “Colorado Businesses Claim Identical ADA Lawsuits Filed By Florida Attorney ‘Extortion.’”

What Is “Drive-By Litigation”?

Although premised on the altruistic goal of fighting disability discrimination, these suits have become a profit-driven, litigation machine of high volume, boilerplate complaints, filed with the ultimate goal of squeezing business owners so that the plaintiffs and their attorneys can profit quickly from cash settlements in the tens of thousands of dollars.

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The problem with these cases is that the vast majority are not situations where a disabled individual truly felt discriminated against and sought out an attorney to help redress an injury due to a lack of accommodation. Instead, it is the lawyers who hire investigators to identify local businesses that are not in technical compliance with the ADA, and then recruit plaintiffs from disability advocacy groups to serve as the front person. The investigators take pictures and build the case while the plaintiffs merely “drive by” the establishment, without any honest intentions of ever servicing the establishment.

Once the boilerplate suit is filed, questionable litigation tactics are then employed, such as serving immediate discovery in violation of the rules, asking the courts to order the parties to a settlement conference to force a quick settlement, and refusing to accept agreements or assurances of ADA compliance without monetary payments, even though the ADA itself does not allow damages to be awarded to plaintiffs (the ADA allows only injunctive relief and attorneys’ fees).

Earlier this year, the New York Times reported that “[i]n the last year, 3,000 [accessibility] suits, including more than 300 in New York, were brought under the Americans With Disabilities Act, more than double the number five years ago.” Other states hit hard have been Ohio, Florida, California and North Carolina. This is an unfortunate and lucrative cottage industry in the legal profession, preying on small businesses who often times opt for settlement over litigation to avoid legal costs since they don’t have resources like Wal-Mart. But, in some cases, where business owners decide to fight back, courts have dismissed the suits, sanctioned the plaintiff’s attorneys for unscrupulous litigation tactics, and/or awarded attorneys’ fees to prevailing business owners.

What Can Businesses Do Before They Get Sued?

If you have not done an audit lately, or ever, it is a good idea to conduct an ADA accessibility audit. Self-audits can be done with good checklists, or by a professional. Also, it is important for business owners to review their insurance coverage to see if they have, or can obtain, insurance coverage for accessibility lawsuits.

What Should Businesses Do If They Get Sued?

You are not alone, so don’t go it alone. Engage competent counsel to protect your rights as a business owner. Legal arguments can be made to dismiss certain claims or to dismiss the entire case at the onset of litigation or after discovery, which can save thousands of dollars in legal fees.

Colorado Department of Labor Identifies Unemployment Fraudsters

Posted in Human Resources, Unemployment Insurance

The Colorado Department of Labor and Employment is listing the names of individuals prosecuted for unemployment insurance fraud on its website in an attempt to help minimize unemployment fraud and abuse.  According to the CDOL website, there were 18 prosecutions in the 1st quarter of 2012, resulting in judgments to recover $223,667.80 in fraudulently paid benefits. 

iStock_000017980890XSmall.jpgThis recovery, however, is just a drop in the bucket of the total amount of overpaid or fraudulent benefits paid out each year in Colorado.  According to 9News, approximately $158 million, or 17%, of the total benefits paid in Colorado in 2010 were due to overpayments or fraud. 

The numbers for 2011 do not appear better - the U.S. Department of Labor reports that through June 2011, Colorado’s improper payment rate was 17.5%, placing Colorado as the 7th worst state in the nation in terms of unemployment abuse:

  1. Indiana (43.57%)
  2. Louisana (43.55%)
  3. New Mexico (27.07%)
  4. Arizona (19.79%)
  5. South Carolina (17.90%) 
  6. Virginia (17.77%)
  7. Colorado (17.50%)

– with the most efficient states being Vermont (4.54%) and Massachusetts (5.06%).  

As I understand, not all of the improper payments are due to fraud.  Instead, much of the problem lies with overpayments and clerical errors.  For example, claimants who report they have found employment may still get mailed a benefit check even though they no longer qualify for benefits.  This is because the CDOL’s computer systems are old and outdated, and it takes a long time for the information to update across systems.  As a result, often times, claimants may not even know or understand that they received an “extra” benefit check from the government.  

I first found out about the the woeful state of Colorado’s unemployment insurance program and the publishing of names of individuals prosecuted for unemployment fraud and when I attended a Colorado Association of Commerce and Industry (CACI) meeting in October 2011 with guest speaker Ellen Golombek, Executive Director of the Colorado Department of Labor.   To Ms. Golombek’s credit, she appears focused on transparency and implementing needed change to improve the CDOL.  

With new and improved systems and efforts to crack down on fraud and erroneous payments, taxpayers in Colorado will hopefully see some relief from the millions and millions of dollars lost each year in improper payments.  Certainly, the public identification of unemployment fraudsters is one step forward to attempt to curb abuse. 

In addition, Colorado offered an Amnesty Program for individuals to come forward and avoid penalties and prosecution by agreeing to pay back unemployment benefits that they should not have received in the first instance, whether by overpayment or by fraud.  The formal Amnesty Program was available only for a limited time, and as I understand, expired as of December 31, 2011.  However, the Colorado Unemployment Insurance Benefits Payment Control Hotline (303.318.9035) remains open, and provides an avenue for individuals to contact the Colorado Department of Labor and, depending on the circumstances, enter into voluntary repayment agreements to pay back overpayments and avoid facing penalties, interest and/or other prosecution.  More information can be found on the Colorado Department of Labor (Unemployment Insurance and Overpayments) website.     

Colorado’s Minimum Wage Increases 3.8%, to $7.64 Per Hour

Posted in Colorado Wage Act, Fair Labor Standards Act, Human Resources

iStock_000017953455XSmall.jpgEffective January 1, 2012, Colorado’s minimum wage increased by $0.28, from $7.36 per hour to $7.64 per hour (for tipped employees, from $4.34 to $4.62).  This is $0.39 more than the federal minimum wage of $7.25 per hour.  

The new minimum wage requirement is set forth in Colorado Minimum Wage Order 28 (PDF) now in effect. Because employers in Colorado must comply with both federal (Fair Labor Standards Act) and state (Colorado Wage Act) laws, the higher prevailing wage must be paid to employees.

This $0.28 increase represents the 3.8% increase to the Denver-Boulder-Greeley Consumer Price Index (CPI) from 2010 to 2011. Colorado is one of eight states with a minimum wage tied to inflation. The other states include Arizona, Florida, Montana, Ohio, Oregon, Vermont, and Washington. Colorado’s inflationary adjustment requirement was passed by a relatively close vote on Amendment 42 to the Colorado Constitution in 2006 (823,526 in favor; 721,530 against).

According to the Bell Policy Center in Denver, and as reported by the Denver Post, this year’s minimum wage increase will affect 74,000 workers in Colorado, or 3.4% of Colorado’s workforce.  

More information about the 2012 Colorado minimum wage increase can be found on the Colorado Department of Labor website.